Introduction
Selling a product through an overseas agent is a very
successful strategy. Sales agents are available on commission basis for any
sales they make. The key benefit of using an overseas sales agent is that you
get the advantage of their extensive knowledge of the target market. Sales agent
also provides support to an exporter in the matter of transportation,
reservation of accommodation, appointment with the government as and when
required. It is, therefore, essential that one should very carefully select
overseas agent.
Merits of Appointing a Sales Agent
There are various types of merits associated with appointed a sales agent for
export purpose are as follow:
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Sales agent avoids the recruitment, training, time and
payroll costs of using own employees to enter an overseas market.
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An agent is a better option to identify and exploit
opportunities in overseas export market.
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An agent already have solid relationships with
potential buyers, hence it saves the time of the exporter to build own
contacts.
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An agent allows an exporter to maintain more control
over matters such as final price and brand image - compared with the other
intermediary option of using a distributor.
Demerits of Appointing a Sales Agent
There are also certain disadvantages associated with appointing a sales agent
for export purpose which are as follows:
Important Points While Appointing a Sales
Agent:
Appointing right sales agent not only enhance the profit of an exporter but also
avoid any of risks associated with a sales agent. So it becomes important for an
exporter to take into consideration following important points before selection
an appropriate sales agent for his product.
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Size of the agent's company.
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Date of foundation of the agent's company.
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Company's ownership and control.
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Company's capital, funds, available and liabilities.
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Name, age and experience of the company's senior
executives.
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Number, age and experience of the company's salesman.
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Oher agencies that the company holds, including those
of competing products and turn-over of each.
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Length of company's association with other principal.
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New agencies that the company obtained or lost during
the past year.
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Company's total annual sales and the trends in its
sales in recent years.
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Company's sales coverage, overall and by area.
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Number of sales calls per month and per salesman by
company staff.
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Any major obstacles expected in the company's sales
growth.
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Agent's capability to provide sales promotion and
advertising services
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Agent's transport facilities and warehousing capacity.
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Agent's rate of commission; payment terms required.
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References on the agents from banks, trade associations
and major buyers.
Some source of
Information on Agents is:
Agent v Distributor
There is a fundamental legal difference between agents and distributors and an
exporter should not confuse between the two. An agent negotiates on the behalf
of an exporter and may be entitled to create a legal relationship between
exporter and the importer
A distributor buys goods on its own account from exporter and resells those
products to customers. It is the distributor which has the sale contract with
the customer not the exporter. In the case of distributor, an exporter is free
from any kinds of risks associated with the finance.
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